It’s a hard read this month as Informed Sources explores Network Rail’s Strategic Business Plan (
Before the
There are three versions of Network Rail’s net revenue requirement for 2009-2014 to be compared. That in the
And they don’t match. I make the funding gap about £5billion. It represents around 20% of the
Much depends on the efficiency savings summarised in this box.
CP4 efficiency battleground What ORR wants - A repeat of the 30% cumulative savings Network Rail expects to deliver in CP3. What DfT Rail assumes in the White Paper - an even 5% a year improvement which equates to 23% over five years. What Network Rail is offering - 17% in total before allowing for price inflation
Network Rail has analysed the implications of the external aspirations on the
Network Rail views the ORR and DfT efficiency assumptions with horror. Even the remaining reductions in the current Control Period 3 ‘represents a major challenge’.
It proposes ‘underlying’ efficiency savings of 5% in the first two years, of the new Control Period declining to 2% in the last year of CP4. This gives 17% over the five years – but that is before price inflation which knocks off 5% or so. Hence the gap.
As might be expected Network Rail defends its own efficiency estimates vigorously, even passionately. It urges ORR to ‘step back’ and ‘allow the company space to deliver its planned improvements’. It warns ‘Intrusive regulation’ could stifle Network Rail’s ability to focus on driving through its improvements’.
In addition to challenging the efficiency assumptions on which the SoFA is based, the
For example Network Rail puts the total expenditure on existing enhancements – such as the last bit of the West Coast Route Modernisation - plus DfT specified schemes in the HLOS at £5.257 billion including contingency.
But then come extra ‘potential projects’ which will be needed to meet all the capacity requirements in the HLOS. These include things like platform lengthening and power supply strengthening to support longer trains. The cost adds up to an extra £2 billion.
Then there are the higher Public Performance Measures in the HLOS. Here the message is fund ‘significant additional investment’ or cut back the PPM aspiration from 92-93% to an overall PPM in
Could cost ‘up to £400 million’.
In any case the value passengers put on PPM figures above 90% is ‘unclear’. And anyway if capacity is the main priority, running more services could be preferable, even if this hit the PPM.
Another optional extra is the ‘seven day railway’, or as Network Rail prefers, ‘more of a seven-day railway’. Actually, much can be achieved by getting the basics right, in particular ‘improved discipline’ over taking major possessions.
But Network Rail reckons that around £300 million will have to be spent to keep the railway open longer. Much of this would be capital investment with a positive cost benefit ratio.
Towards the end of the
Cost cutting could also have a ‘significant impact’ on the company’s ability ‘to build success with our suppliers’ Without ‘a healthy supply chain’ Network Rail would be unable to achieve its ‘future ambitions and targets’.
With DfT hankering after a return to ‘historic norm’ funding levels and the TOCs signing up to eye-wateringly optimistic subsidy/premium profiles in an attempt to keep or win franchises, the big question is whether Network Rail or the rest of the railway and Government is out of step on costs.
Of course, Network Rail may, as Regulators put it, be ‘gaming’, with economies up its sleeve in the
And if push comes to shove, Network Rail could reject ORR’s final offer and refer the issue to the Competition Commission. 2008 could be a fun year
In January DfT Rail is ‘aiming’ to publish its rolling stock ‘plan’ expanding on the 1300 extra vehicles in the HLOS. We have been warned not to expect too much in terms of detail.
However, in the
Finally I report on something completely different – the on-going smartcard wars between ITSO and Oyster, as revealed at the ticketing conference I mentioned last month.
Any day now the London area commuter Train Operating Companies will sign up to the implementation of the Oyster card at national rail stations within London Zones 1-6. Transport for
ITSO, is, of course, the national smartcard specification promoted by DfT. DfT Rail has made the introduction of ITSO compliant smartcards a condition of recent franchises.
According to TfL, the 250 National Rail stations involved will be able to handle Oyster from January 2009. From the same date South West Trains is due to have implemented an ITSO compliant smart card scheme across its network.
Under the deal to ‘oysterise’ National Rail, DfT agreed to cover the £19 million cost of making Oyster gates and validators on the Underground, at major rail termini and on the buses, accept ITSO products. Unfortunately that price assumed a cut-down ‘ITSO-lite’ which DfT subsequently rejected. Now the expected cost is somewhere north of £50 million. And, according to Informed Sources, the Oyster engineers will have their hands full with other development for the next two years.
So where does that leave SWT commuters arriving at
After the quiet summer life – both professional and personal - has been hectic in the last month. Dominating my working life has been the publication of the Network Rail
Add in singing second bass in a performance of Faure’s Requiem at a service on All Souls’ Day and the brain cells were working overtime.
With so much going on it was head down the following week writing the column. Which meant I had to cancel a meeting in
Last week, the prints came down on Monday and on the Thursday it was up to
Looking ahead, the pace continues. This Tuesday the IRSE is running the definitive one day conference on ERTMS and on Friday it’s the Fourth Friday Club Golden Spanners awards. On the 28th it’s the CILT conference in
This will be greatly strengthened by a letter I received in a brown paper envelope urging DfT to get moving now with some powerful arguments for a rolling programme. That the co-signatories were the Chief Executive of Network Rail and the Chairman of ATOC suggests that the tectonic plates are shifting. More of that in January when the Informed Sources moratorium on electrification ends.
And the next day I have my second bionic eye fitted. So if we meet in December and my right eye is bloodshot, it’s not the result of long hours at the computer wrestling with the
Roger